In the early '80s, Steve Jobs and Lee Clow formed one of the most enduring client-agency relationships in the advertising world. In a business known for corporate infidelity, Jobs repeatedly tapped Clow and his ad agency, TBWA/Chiat/Day, for some of the company's most iconic ads, including the "1984" Super Bowl ad and the "Mac vs. PC" campaign in the 2000s.

Now, that relationship appears to be on the rocks. According to a report in AdAge, Apple is in the process of building an internal ad agency that will eventually have as many as 1,000 employees. In recent pitches, TBWA/Media Arts Lab, the agency that has serviced just one client, Apple, since the mid-2000s, has competed with Apple's own advertising agency and even invited outside agencies in on pitches. There's no indication that MAL, as it's known, is on the outs, but more and more pitches seem to be going to the internal team.

Since Jobs died in 2011 and Clow, now in his early 70s, retired in 2009, such a rift might be expected. Apple's apparent attempt to create an in-house ad agency is fairly unusual, though. Outside of fashion brands, most major companies rely on outside agencies. Many industry executives stress that Apple is a unique case, though, and has a good chance of pulling it off.

A woman walks past a wall of poster ads for the iPod shuffle outside the Apple store in San Francisco, Friday, Dec. 29, 2006.

Image: Jeff Chiu/Associated Press

A new phase

Apple's shifting advertising strategy coincides with a new phase for the company. With a pending $3 billion purchase of Beats in the works, a smartwatch launch likely this fall and a new focus on healthcare, the company appears to have emerged from a period of inertia following Jobs' death.

That intermediary stasis was also reflected at times in Apple's advertising during the period. An ad exec who used to work on the Apple account at MAL says the nadir may have been Apple's "Designed in California" campaign last year. The ad coincided with rival Samsung's promotion in which it gave away 1 million copies of Jay-Z's Magna Carta Holy Grail to consumers who bought the Galaxy S3, Galaxy S4 and Galaxy Note 2.

"There's this huge buzz and then Apple has yet another manifesto about being designed in California," the exec says. "It was really sort of wallpaper-ish, almost milquetoast in its advertising, like they were still going with another 'Think Different' manifesto."

Another low point was Apple's "Genius Bar" ads in 2012, which featured putative Apple Store employees solving people's problems on the fly. After fans complained, Apple pulled the ads after a week.

Pete Harvey, partner and creative director at ad agency barrettSF, says Apple and MAL were working out Apple's post-Jobs brand. "Apple and MAL probably both had a hard time articulating what Apple was," he says. "I don't think the work was as iconic."

Though Apple has been characteristically mum about its advertising, a recent patent lawsuit with Samsung shed light on Apple SVP of Worldwide Marketing Phil Schiller's assessment of Apple's ads.

"I watched the Samsung pre-Super Bowl ad that launched today," read an internal email from Schiller unearthed during the trial in early April. "It's pretty good and I can't help but think these guys are feeling it (like an athlete that can't miss because they are in a zone), while we struggle to nail a compelling brief on iPhone."

Internal focus

Such misfires and misgivings may have prompted Apple to take more control. The company has always pitted MAL against its own graphic design group, which was unusual enough, but creating an internal ad agency is unprecedented. Though Google has a Creative Labs staffed by about 100 people and Red Bull has created events like Felix Baumgartner's 2012 space jump without an ad agency, creating a full-fledged, in-house ad agency is rare. The closest parallel might be Hyundai, which created its own external ad agency, Innocean, in 2008. (The agency has since expanded and taken on other clients).

Unlike Innocean, which had an office about 12 miles from Hyundai's Costa Mesa, California, headquarters, Apple's new entity is truly in-house. The company has so far hired Wolff Olins' Global CEO Karl Heiselman and Bill Davenport, a former partner at longtime Nike agency Wieden + Kennedy. Apple has also poached some former MAL staffers.

Allen Adamson, managing director of branding agency Landor Associates' New York office, says few companies have in-house agencies because it's hard to attract talent.acquisition, which some framed as an expensive acqui-hire intended to bring the creative vision of founders Jimmy Iovine and Dr. Dre to the company, Apple may prefer to absorb innovative thinkers rather than take them on as partners. Though MAL has never had a problem keeping secrets, the approach would also help Apple maintain its mystique by limiting future opportunities for leaks.

The downside of the approach is that Apple could become more insular and less in touch with the zeitgeist. Again, though, Adamson says Apple is a special case.

"The people they've brought in tend to have a very strong sense of what is necessary," he says. "In fashion, you spend less time asking people what they want and more time telling them what the next big thing should be."

Patrick Godfrey, founder and president of ad agency Godfrey Q, agrees that Apple has a better-than-average chance of avoiding the traditional pitfalls of using an in-house ad agency. "It's an ill-advised move for many companies because they lose perspective," he says. "I feel like Judas for saying this, but it could work because they have an uncommonly strong focus."

But Harvey, the creative director at barrettSF, foresees some potential difficulties.

"I wonder how hard it is to get a certain level of perspective when you're the agency and the client," he says. "It's hard to see the forest for the trees when you're the trees."

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